‘progress is not the elimination of struggle, but rather a change in its terms’ - Aneurin Bevan

Some thoughts on Labour’s co-operative future

Preview of The Red Book, in the Blue Bar, Liverpool on September 25, 2011. This wasn't the speech I gave, but the text I was working from.

Thanks to everyone who has made the book possible – especially Eoin for being encouraging and inspiring. My intention in writing my piece was to ensure that if other coloured books were going to mention co-operative and mutual enterprise, perhaps more in the context of public services, it’d be good if the Red Book had something to say about co-ops in the private sector – which is, after all, the greater part of our economy. I’m not a qualified expert in this field, just a well-read (and well red) social sciences student with a keen interest in co-operativism.

I don’t want to give the impression that I’m seeking, as comrade Mandelson put it, a “pre-New Labour” formation, but it’s interesting that, for example, the necessity of a British Investment Bank was raised by Mandelson’s preferred Miliband as part of his campaign to lead what he called Next Labour, and was something that Labour had advocated up until the big-bang of financial deregulation which took place in the late 80s, and the subsequent prawn cocktail offensive. So it doesn’t make sense to think in terms of old and New Labour in this regard, because we can see that a problem exists for small businesses and new start-ups in respect of affordable credit. And it was in the pages of Progress magazine that Matt Zarb-Cousin suggested that state-backed investment banking have a bias towards worker co-ops. So we are in a period in which creative thinking is being permitted, and should be encouraged.

I must confess, if I knew that what was GEER would be called Labour Left, I might have been put off contributing my essay. Not out of fear of being thought of as a radical: one of my proudest moments is having been described as “an unreconstructed old socialist in a young person’s body” by a Liberal Democrat councillor. No, my worry is that I am always making the argument against using terms like left-wing, right-wing, and centrist, because they are abstractions which most people don’t understand and which can get in the way of unity, and the understanding of the actual divisions between the interests of labour and capital in the economy, the conflict between the two being reflected upon political decision-making.

For example, Roy Hattersley was thought of as being on the Labour right – yet I read his book Choose Freedom and it talks about the kinds of policies that are called left-wing. The same with Tony Crosland – an essay by him from the seventies called for private-rented housing replaced with a co-operative rented housing sector. Ex-Labour, SDP now Lib-Dem people like Vince Cable coming out with statements like “capitalism kills competition” and calling for a “New Deal-style stimulus”. You have Tories decrying corporate and financial power – MPs like Douglas Carswell, commentators like Charles Moore, who is the official biographer of Margaret Thatcher, and think-tank wonks like Philip Blond. All admitting the power balance has shifted away from working people and towards corporate and financial elites.

I’ve a term for this kind of radical posturing by Liberals and Tories, by the way: it’s ”red-wash”. The language of co-operation and mutuality – the Big Society – has been used to offset the bad news about cuts to public services, to drown out the sound of knives being sharpened with soothing sounding words. And talk of “re-balancing” away from the dependence on the City has been used to suggest that in place of public spending, private investment would rebound and spread. Sadly, this hasn’t happened – the opposite is true, take away public spending before private investment has recovered, and instability will follow.

But how does the typical voter describe political ideology? A shop-worker in her early twenties who has zero interest in politics or current affairs described the Tories in this way: “they are on the side of a few rich people”. And Labour: “they are for ordinary people like us”. This is the truth we need to speak.

So, I’d rather the Red Book was being launched by “Labour Unity” – Labour united to win office so that ordinary people can have more power. (Now, you could retort – why Red, that’s an abstraction – and you’d be right, but it’s always been my favourite colour. So, that’s my intellectual justification for approving of the colour of the book, if not the directional metaphor contained in GEER’s new name.)

Think about the name of the organisation which is having it’s annual conference this week: the Labour Party.

* First part is about creating, producing, providing – to labour is to work.

* Second word means to get-together – to celebrate or commemorate.

I’m also a member of Labour’s sister, the Co-operative Party. Again, think about the name and it’s the same thing: working together.

The duplication isn’t accidental – it’s right the labour movement and the co-operative movement should have structures of political representation. Now what the two parties have to offer each other in the coming years could be put in cynical terms: the Labour Party will learn how to maintain services where it holds office in local government by using cooperation and mutuality, and the Co-operative Party will further raise its profile within the Labour Party, parliament, and amongst the public, and thus the profile of the co-operative movement. But there is something deeper going on here to do with how Labour thinks about work.

Let me describe a dominant way of organising working life in order to make it much less familiar the everyday reality. Think of an firm made up of cats, dogs, and mice – ignore the fact that dogs chase cats and that cats kill mice. The cats gain from their shares if the business succeeds, but can slink away if it all goes wrong. The dogs guard and govern the business; because of their crucial role, they are handsomely rewarded – sometimes disproportionately. The mice are hired do all the work, yet the lions share of the gains from goods and services sold go to the cats, with the dogs taking their slice of the cheese.

Is this fair? Is it democratic? Well, the cats boss the dogs and the dogs boss the cats. And though the mice do all the work, the cats get the cream.

Now, as you’ve probably already guessed, I’m talking about organisations operating in the midst of our democratic society. (No, they’re not run by actual cats or dogs, although we do speak of fat cats and top dogs.) These organisations are incorporated by law, granted the privilege of limited liability by the state. Their bottom line is not a balance of interests but a sectional interest: shareholder value, maximising the rate of return.

Let’s imagine all the animals organise as equal members, each with a vote and a share of the profits. This is a formal equality, not absolute – rewards are according to contribution. But this democratic revolution has created a co-operative or mutual enterprise. It’s not utopia, but it is better than despotism. Perhaps the way I’ve described it makes it sound more like Bagpuss than business – so it goes.

When we talk about co-ops and mutuals, we have to talk about power. Our very own Professor Yaffle, Maurice Glasman has spoken of the Labour Party’s role in this battle between the needs of people and the needs of capital. Over generations, ordinary people have struggled to become full members of British society – to gain the right to vote and then to gain access to healthcare and education. For equality regardless of gender, faith, ethnicity, ability, or sexuality.

The socio-economist Johnston Birchall makes a valuable distinction between investor-owned and member-owned businesses. We are all very familiar with enterprise as a means to provide a financial return to investor-owners. But we are less familiar with member-owned businesses – there is a sense in which The Co-operative Group or the John Lewis Partnership are an exception to the rule.

And yet we are very familiar with democratic processes, with reciprocity (give-and-take) within organisations. We need to understand and to spread the fact that we need democracy in our economy if we are to live in a Good Society.

I’ve thought about all this in the context of what our party says it stands for in its constitution: even the newer clause four declares for democratic socialism, though the emphasis on the “full fruits of labour” is lost. When you consider that the party’s ideal model of organisation in the old clause four – “common ownership, popular administration” – was replaced with nothing coherent, it is unsurprising that people outside of our party seem confused about our values.

And the reason for this was a compromise, not primarily with the electorate but with Britain’s ruling class. Sure, the party did not and does not want the public to think our conception of socialism was bureaucratic, that the formula is “nationalisation plus Lord Whoever”. But the party’s leadership believed that by compromising with those who hold economic and political power, a social democratic programme of government could be implemented – the City would be free from reform, and would not be forced to invest across the UK.

And so it was that a Labour government entered office without an immediate stock-market slide. There was increased spending on health, education, regional development, children’s centres, policing, and much needed reforms such as devolution, civil partnerships, and so on. The laws restricting trade union organizing remained in place, meaning it remained harder for workers in the UK to ensure wages kept pace with the cost of living. But the global financial crisis shattered Labour’s compromise with the establishment and some of the illusions leading members of the party appear to have had in the power of the City and the wisdom of deregulation.

Compromise made sense in the context of an open UK economy, where capital was free to roam, to employ people in a global labour market which had doubled with the opening of china, India, and the Eastern Bloc. But when the crisis hit, the commanding heights of Britain’s economy were at an all time low – yet compromise meant there was no critique of capital since all criticism was verboten, too “old Labour”.

Though this, public confusion about our values continued: if we are for hard-working families – why delay equal rights for agency staff? If we are for full employment, for British jobs – why increase structural migration? Why allow UK firms to be bought out only to have jobs outsourced? If we are in favour of rewarding success – why bail out failing banks then allow them to pay rewards for failure?

And these were the questions you’d get on the doorstep, mixed in with more local and specific concerns, when out canvassing. I remember one man, a builder, politely saying he couldn’t vote for us in the general election because of the recession and would vote Tory this time instead. In a rather splendid bit of doublethink during the local elections this year, one woman insisted sharp cuts were needed, supposedly to reduce the deficit – the Tories were “cleaning up Labour’s mess” – but then she said our local (Labour-run) council, which is having its funding cut, should employ young people without work – to do jobs that need doing. The information supplied by the Tories, establishment economists, and the mainstream media, told her that cuts were inevitable – her common sense told her that spending was needed because there was work to be done and people looking for work, and if there was nothing to connect the two, collective action could solve the problem.

The general election was lost, ultimately because of a feeling that it was time for a change. And so far, our response has been right – to focus on becoming a community organisation. To paraphrase a song “a movement once again”. At least we will have a greater capacity to get our message across. But we have to rethink our assumptions about having a hands-off approach to the direction our economy takes in the long-run, and having a deferential attitude towards those with unaccountable power in this country.

We’re focusing this week on the British Promise, how people in these nations work hard in the hope they can retire comfortably and their children can go on to enjoy a better life. This promise is undermined by the squeeze on living standards, the silent crisis for families and individuals brought about by rising rent, food, and utility bills, the cost of care services – by stagnant wages or lack of employment.

Most people work in the private sector, within corporate workplaces – most without trade union representation – for a number of reasons, chiefly restrictive legislation (red tape, if you will) designed to limit the collective strength of workers. There is a contentment theory – most workers are content to be without union cover, to be uninsured. This completely ignores the issue of power – state and corporate power has sought to demobilise organised labour because the mutuality of trade unions, the processes of democracy and solidarity, threatened the primacy of investor interests.

And most people work in an entirely different kind of private sector – I’m thinking here of the work of mothers and fathers, of carers within the family, including siblings and grandparents – there’s no hourly rate for this work, and where would we be without it?

There’s also voluntary work, which in an era of high unemployment is supposed to take the place of paid jobs in the public sector, the so-called Big Society, and as a means of improving your skills so you can improve your chance in the competition for jobs in the private sector.

A few weeks ago I overheard a conversation that brought tears to my eyes. Two young men in their late teens, unemployed but volunteering in a charity shop: one saying to the other that he wished he’d worn his reading glasses because he didn’t know they would be shown how to work the cash register that day – and that if he could say in job applications that he had that experience, he might stand a better chance of getting paid employment in a shop or supermarket.

John Denham has started a discussion about the “good company”, but the Shadow Cabinet have not yet dealt with “good ownership” in a way that relates to people’s working lives. I wrote an article last year for Labour List, part of the Ideas for Electability series, called The Right to Own, (thanks to Mark Ferguson) which was essentially a revised version of a guest blog-post I had written for “Though Cowards Flinch” (thanks to Paul Cotterill). I argued that Labour should help establish what would be a more ambitious version of Supporters Direct – which helped football fans gain a collective shareholding in their clubs, which has led to a number of smaller clubs becoming entirely owned by their fans. If this could be done for football fans, could it not be done more broadly, to help workers gain a collective stake in their company?

Labour could learn from the most enduring policy of the Tories in the 80s – both in popularity and longevity – right to buy. It enabled council housing tenants to buy the property they lived in and rented. This was not a right without responsibility – to be able to buy, there was a commitment in the form of paying out of savings / entering into a mortgage agreement with a bank or building society. The way the policy was implemented meant it was a disaster for affordable housing, given that housing stock sold at below-market rates was not replenished – indeed, that was the point of the policy for the Tories. But the appeal of autonomy, an ownership stake, a sense of security, cannot be underestimated. Had Thatcher been serious about a property-owning democracy, about popular capitalism, we might not have seen the abolition of the Co-operative Development Agency, the legislation allowing demutualisation of building societies. Such talk of spreading wealth has been mystification from the Tory leadership – but it is talk that we can use with Tory MPs, activists, and supporters. Similarly with the Liberals and their concept of “co-partnership” in industry.

The “Right to Own” concept isn’t in my article because I took seriously a constructive criticism from Maurice Glasman, who kindly responded to an unsolicited email. It sounds like another demand. And that’s not my intention. We have a right to own, but not the resources to make it happen – and so most people must hire themselves out, even though most people say they’d like to be owner-operatives of a small business like a shop or pub. Anyone can own their own business, be their own boss – but for our current economic system to function, this desire for a fair share must be denied to the many. We can’t demand someone else do this for us, we have to build the movement that can make it happen – more opportunities, shared prosperity.

I mention in my essay that the trades union movement in the US has seen an interesting recent development, two years ago the United Steel Workers union entered into a collaboration with the Mondragon International, the worlds largest worker co-op. The aim is to establish in the US and Canada new “union co-ops” – worker-owned firms in which the USW will play a role in representing members. The purpose will be to create jobs that provide a decent income, which won’t be outsourced and work will benefit the community. It’s a very significant advance, and one I hope is followed here in the UK – though I know that trade unions organising in the private sector, their staff and lay activists, have enough on their plate with the impact of recession and austerity.

I didn’t have space to mention care – Southern Cross, headquartered in Darlington, and other scandals, the Care Quality Commission’s finding that mutual care is better. And I didn’t dare get started on David Harvey’s concept of “the capital surplus absorption problem”, or Dan Hind’s proposal for public commissioning to support investigative journalism. To say nothing of proposals for monetary reform to create a system of public credit...

I recommend you read Joe Russo’s “Co-ops and New Labour”, an essay in “What next for Labour? Ideas for a new generation” a collection edited by Tom Scholes-Fogg and Hisham Hamid. The book has a number of very interesting pieces, just to mention a few: Matt Pitt on a British Investment Bank; Keiran Roberts on our environment and sustainable socialism; and Richard Robinson on co-ops, community, and faith. In the Purple Book, I recommend Tristram Hunt’s chapter, the one by Paul Richards, and of the chapter on criminal justice co-written by someone who has been an inspiration to me, Jenny Chapman, Darlington’s MP.

Sadly, I forgot to include a mention in my chapter of Keiron Merrett’s article on credit ratings agencies, Will Davies’ book Re-inventing the Firm, and Cliff Mills’ essay Funding the Future. Nor did I have time to refer to the remarkable Lost Property – a book written in 1948 by the co-operator Paul Derrick, who said of the task facing us:

“To turn a capitalist economy into a socialist one is not to nationalise this company or that; it means incorporating the cooperative principles of a limited return on capital and democratic control in company law.”

2 comments:

I was very interested given my own extensive work in relation to Worker Owned Co-ops. But, I think it is very important to stress the point that Marx and the First International made in advising workers to set them up. That is that if they are not to be simply Capitalist enterprises owned by workers - and and also to suffer from the inevitable opposition they will face from larger Capitalist firms - it is necessary that each unit be a part of a larger Co-op Federation acting as a holding company.

The role of the LP, the Co-op Party, and of the Co-op Bank are extremely important in this respect in driving forward the agenda as a political not just an indistrial/economic agenda. The Co-op Party arose at the beginning of the last century, despite some opposition to its creation by Co-op Members initially, precisely because the atatcks that were being faced from the State, demonstrated the need to wage a political fight too.

That is no less true today. I think the link up between the USW and Mondragon is extremely important as I've written myself in the past. But, theree has been a history throughout Europe of some union officials deliberately sabotaging Co-ops, because of feeling that they undermine their function as middle men and negotiators between bosses and workers. This again emphasises the need for a political struggle across the Labour Movement itself, initially simply for more effective democracy.

Finally, if worker owned Co-ops are to be a viable alternative in the short term, it is necessary to wage another political/industrial struggle, and that is for the democratic right of workers to control the £800 billion of funds in their Pension Funds. I would also prefer, ultimately for them to directly control the Funds contained in the National Insurance Funds, but first things first.

With "Occupy Wall Street", rapidly becoming "occupy everything", the Co-op message becomes ever more meaningful. In Britain, if workers and customers occupy services, buildings etc. threatened with closure by the Cuts, or the economic crisis, the logical extension of that is to demand that they be operated immediately by those workers as Co-ops. That is an immediate practical solution that workers themselves can achieve themselves here and now, without the need for demands for General Strikes, insurrections etc. i.e. Revolution Now. But, it requires thatthe Labour Movement begin to think in those terms, to think about how all these businesses/services can be organised, run in our interests, what they should produce, do, and how they should be financed.

The last thing workers should do having occupied anything, is to give up their immediate ownership and control to the Capitalist State.

I should have mentioned your name in the body of the text as it was your blog, if I recall correctly, which brought the USW-Mondragon partnership to my attention. Your writing on the economics of co-operation was very helpful to me in gaining an understanding of the subject and I will be sure to give you due credit in future.

As regards the role of trades unions in co-operative and mutual enterprises, in addition to the problem you alluded to there are problems in some prominent firms where there is not a recognition of trades unions or a willingness on the part of managers to engage with the workforce outside of "official" structures. I think both can be overcome in future if there is a realisation on the part of trades unions that they can deliver on their purpose of providing independent advice and help, and on the part of managers that accepting the role of independent representatives of workers will help the functioning of the firm. In addition to effective democracy, there will also be a need for specific education and training for CME managers.

There is a growing understanding of the potential of using pension funds to direct investment, but it is not as yet, so far as I know, in the context of expanding the CME sector. But in terms housing, for example, there is serious consideration being given to leveraging the power Labour has with regards local government pension funds, etc.